Harley-Davidson Moving Some Production Overseas Amid Rising U.S.-E.U. Trade War

The company calls it the "only sustainable option" to keep selling motorcycles in Europe—its second-largest market.

Iconic American motorcycle manufacturer Harley-Davidson has announced a plan to shift some of its production from the United States to overseas plants in response to retaliatory European Union tariffs, the latest casualty in the Trump administration's growing trade war with the rest of the world.

Europe is H-D’s second-biggest market (guess the first), having sold 40,000 bikes there in 2017. The Associated Press reports that the new tariff on imported American motorcycles jumped from 6 percent to 31 percent, which translates to an added cost of about $2,200 per bike, according to a regulatory filing from Harley.

Since Harley-Davidson wants to avoid passing those new costs onto buyers in the form of higher prices, the Milwaukee brand is moving more production to its existing overseas plants in places like Australia, Brazil, India, and Thailand. Bikes built at these facilities for European customers won't be subject to the new EU tariffs, which came after President Donald Trump instituted steep tariffs on European steel and aluminum coming into the United States.

"Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally," the company said in a statement. "Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson."

So, it sounds like this move won’t change the fact that every Harley-Davidson sold in the U.S. is still made in America—don't expect to see "Made in Thailand" on a Harley in this country anytime soon. But as the company itself pointed out, part of its appeal is its uniquely American identity, and it's a shame to see that sacrificed on the altar of politics.

But the bigger issue will be whether any American jobs will be lost as a result of any reduction in domestic production, and the company hasn't released any details on which of its three domestic factories will be affected.